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Oil Search takes over PNG health funds

Greg Roberts

Australia's Oil Search is expanding its role in Papua New Guinea from its vast resources activities to running the country's HIV and AIDS programs.

The Bill Gates-founded health financing firm the Global Fund was funding the programs by making direct donations to the PNG government, but stopped the payments after an investigation uncovered the misuse of nearly $US1.4 million.

The fund has instead put Oil Search in charge of how the money is spent on the programs, in partnership with the government.

It is believed to be one of only two instances in the world - the other is Shell in the Philippines - in which a company rather than a government has been trusted with administering the fund's payments.

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Oil Search, which is the biggest investor in PNG, is managing grants worth $80 million through its health foundation to tackle HIV and AIDS along with malaria and maternal and child health programs.

Leading Australian HIV/AIDS researcher Professor Sharon Lewin has praised the program ahead of the AIDS 2014 major global conference in Melbourne this July.

HIV and AIDS cases in PNG are the worst in the Asia Pacific and at epidemic levels, but not as bad as in sub-Saharan Africa.

Oil Search chief executive Peter Botten, who will address the conference, believes the private sector has a moral obligation to help PNG.

"There is a lack of clearly some basic services that are taken for granted in the developed world," he told AAP from Port Moresby on Tuesday.

"It is difficult if you live out at a village with no access to power, a very poor road system that limits your economic development and you can't get goods to market, can't get kids easily to school and the local health clinic is not working too well."

Rather than taking over funds that originally went to the government, he prefers to say Oil Search is in a partnership with the health department, providing drugs, education and other treatment.

The arrangement follows Australia's Foreign Minister Julie Bishop calling for more private sector aid in PNG, following steep falls in the country's UN health and development rankings.

Oil Search is at the centre of an important moment for PNG's economy, with Australia's closest neighbour's wealth and development ranked poorly globally.

The PNG LNG project to commercialise the country's gas resources that Oil Search is a partner in is supposed to more than double the size of the economy, boosting government revenues and lifting living standards.

Expectations are high for better basic services such as roads, hospitals, schools, health centres and power.

"As a major resource owner and part of the resources scene up here we have to play a part to help the government deliver on those services and help them where they need capacity to aid that process," Mr Botten said.

"Without that there is a challenge down the track if those expectations are not progressively met that you run the risk of having social instability and operating problems in that region."